Published: Thursday, April 11, 2013 at 2:27 p.m.

Last Modified: Thursday, April 11, 2013 at 2:27 p.m.

Wilmington Mayor Bill Saffo is fighting mad about a memo that landed this week in the General Assembly saying the film industry's tax incentives led to fewer than six dozen jobs despite the industry claiming more than $30 million in credits in 2011.

"I'll tell you what, they can come down here and I'll show them hundreds of jobs that have been created," Saffo said Thursday. "I'll line up the people who have been hired on a day in and day out basis."

The memo in question came from Patrick McHugh, with the General Assembly's Fiscal Research Division, and was delivered Tuesday to Sen. Bob Rucho, R-Mecklenburg, who as co-chair of the powerful Senate Finance Committee is among those leading the charge for tax reform.

The analysis, summed up in the 10-page memo, could be a harbinger of tough days ahead for the tax credits that are the darling of the Wilmington film industry.

Rucho and others have argued that an overhaul of the state's tax code that lessens the burden on corporations, while streamlining and simplifying the tax structure, would be more effective than the current targeted incentives for specific industries. Rucho did not immediately return requests for comment.

Sen. Bill Rabon, R-Brunswick, the other co-chair of the Senate Finance Committee, said he believes film credits will survive at least until their scheduled sunset date of Jan. 1, 2015. But he can't guarantee their success moving forward from there. Rabon said he has carried legislation on the Senate floor extending the credit but now finds himself in a difficult position at the helm of statewide tax reform.

"I know what they do locally. I've seen what they do to our local economy, and they're good for the local economy," Rabon said. "But is it fair for every person in the state to pay for them to be here? I just don't know."

Numbers game

The memo says the film credit created 290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude. It credits the film industry with attracting 55 to 70 new jobs to North Carolina in 2011.

Some local officials have taken issue with the methodology and conclusion of the analysis. It was conducted using something called the Regional Economic Models Inc., or REMI model, which is designed to measure industrial output, and is also referred to as an econometric model or an input-output model.

"As a planner who has used the REMI model, analyzing the film industry with a model designed to measure industrial output cannot be taken seriously, unless of course the outcome had been determined before the model was run," said Rep. Susi Hamilton, D-New Hanover. "The undeniable truth is that over the past five years the film industry has contributed over $1 billion to our economy. We know that thousands of people work in the industry statewide, and in that context the film credit has not cost the state a cent."

Hamilton and Rep. Ted Davis, R-New Hanover, are co-chairing a newly created film caucus to curry favor for the tax credits among their legislative colleagues.

Johnny Griffin, director of the Wilmington Regional Film Commission, said the numbers in the memo "just don't seem to add up with what we know about the industry."

For example, it says the industry incentive in 2011 created up to 70 jobs and generated $2 million in income. But Griffin said when a project shoots in the region about 60 percent of the budget is labor. As an example, he said that in one season of One Tree Hill, the industry will spend between $25 million and $30 million, equating to between $15 million and $18 million in local payroll.

Hamilton, Griffin and others point to figures published by the Department of Commerce's Film Office, which paint a rosier picture of the film incentive's effect. In 2011, the state benefited from $242 million in direct spending from motion picture companies in North Carolina, of which $121 million was qualified spending. That year the tax credit cost the state $30 million. Also in 2011, the film industry put more than 3,500 North Carolinians to work as crew members and actors, in addition to 22,000 as film extras, said Aaron Syrett, director of the N.C. Film Office, located within the Department of Commerce.

Syrett's top boss, Commerce Secretary Sharon Decker, has reportedly said the state should retain a small number of economic incentives programs, including the film credits.

Currently, film or television productions that spend at least $250,000 can be reimbursed for up to 25 percent of qualifying expenses. The film credit is capped at $20 million for any single feature film production.

Sen. Thom Goolsby, R-New Hanover, said he's still reviewing the analysis. But he met this week with some powerful members of the film industry, including Mary Ann Hughes, a vice president with Walt Disney Co., and two members of the Motion Picture Association of America.

"My personal experience with the film credits it that they have been key to our success in landing multiple television and film productions," Goolsby said. "I watched states like Michigan lose millions of dollars worth of television and film business when they cut their tax credits. I will continue to fight hard with my local delegation for our film industry."

<p>Wilmington Mayor <a href="http://www.starnewsonline.com/section/topic72"><b>Bill Saffo</b></a> is fighting mad about a memo that landed this week in the General Assembly saying the film industry's tax incentives led to fewer than six dozen jobs despite the industry claiming more than $30 million in credits in 2011.</p><p>"I'll tell you what, they can come down here and I'll show them hundreds of jobs that have been created," Saffo said Thursday. "I'll line up the people who have been hired on a day in and day out basis."</p><p>The memo in question came from Patrick McHugh, with the General Assembly's Fiscal Research Division, and was delivered Tuesday to Sen. Bob Rucho, R-Mecklenburg, who as co-chair of the powerful Senate Finance Committee is among those leading the charge for tax reform.</p><p>The analysis, summed up in the 10-page memo, could be a harbinger of tough days ahead for the tax credits that are the darling of the Wilmington film industry.</p><p>Rucho and others have argued that an overhaul of the state's tax code that lessens the burden on corporations, while streamlining and simplifying the tax structure, would be more effective than the current targeted incentives for specific industries. Rucho did not immediately return requests for comment.</p><p>Sen. Bill Rabon, R-Brunswick, the other co-chair of the Senate Finance Committee, said he believes film credits will survive at least until their scheduled sunset date of Jan. 1, 2015. But he can't guarantee their success moving forward from there. Rabon said he has carried legislation on the Senate floor extending the credit but now finds himself in a difficult position at the helm of statewide tax reform. </p><p>"I know what they do locally. I've seen what they do to our local economy, and they're good for the local economy," Rabon said. "But is it fair for every person in the state to pay for them to be here? I just don't know." </p><p>Numbers game </p><p>The memo says the film credit created 290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude. It credits the film industry with attracting 55 to 70 new jobs to North Carolina in 2011. </p><p>Some local officials have taken issue with the methodology and conclusion of the analysis. It was conducted using something called the Regional Economic Models Inc., or REMI model, which is designed to measure industrial output, and is also referred to as an econometric model or an input-output model. </p><p>"As a planner who has used the REMI model, analyzing the film industry with a model designed to measure industrial output cannot be taken seriously, unless of course the outcome had been determined before the model was run," said Rep. Susi Hamilton, D-New Hanover. "The undeniable truth is that over the past five years the film industry has contributed over $1 billion to our economy. We know that thousands of people work in the industry statewide, and in that context the film credit has not cost the state a cent." </p><p>Hamilton and Rep. Ted Davis, R-New Hanover, are co-chairing a newly created film caucus to curry favor for the tax credits among their legislative colleagues. </p><p>Johnny Griffin, director of the Wilmington Regional Film Commission, said the numbers in the memo "just don't seem to add up with what we know about the industry." </p><p>For example, it says the industry incentive in 2011 created up to 70 jobs and generated $2 million in income. But Griffin said when a project shoots in the region about 60 percent of the budget is labor. As an example, he said that in one season of <a href="http://www.starnewsonline.com/section/news4520"><b>One Tree Hill</b></a>, the industry will spend between $25 million and $30 million, equating to between $15 million and $18 million in local payroll. </p><p>Hamilton, Griffin and others point to figures published by the Department of Commerce's Film Office, which paint a rosier picture of the film incentive's effect. In 2011, the state benefited from $242 million in direct spending from motion picture companies in North Carolina, of which $121 million was qualified spending. That year the tax credit cost the state $30 million. Also in 2011, the film industry put more than 3,500 North Carolinians to work as crew members and actors, in addition to 22,000 as film extras, said Aaron Syrett, director of the N.C. Film Office, located within the Department of Commerce. </p><p>Syrett's top boss, Commerce Secretary Sharon Decker, has reportedly said the state should retain a small number of economic incentives programs, including the film credits. </p><p>Currently, film or television productions that spend at least $250,000 can be reimbursed for up to 25 percent of qualifying expenses. The film credit is capped at $20 million for any single feature film production. </p><p>Sen. Thom Goolsby, R-New Hanover, said he's still reviewing the analysis. But he met this week with some powerful members of the film industry, including Mary Ann Hughes, a vice president with Walt Disney Co., and two members of the Motion Picture Association of America. </p><p>"My personal experience with the film credits it that they have been key to our success in landing multiple television and film productions," Goolsby said. "I watched states like Michigan lose millions of dollars worth of television and film business when they cut their tax credits. I will continue to fight hard with my local delegation for our film industry."</p><p><i></p><p>Metro desk: 343-2389</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @StarNewsMolly </i></p>